2017 was undoubtedly a sweet year for crypto currencies, but 2018 has not gotten off to a good start, and bitcoin (BTC), ether (ETH) and Ripple (XRP) are plummeting.
According to CoinMarketCap, of the 100 currencies with the highest market capitalization, 3 are now growing slightly. The remaining 97 fell sharply, and South Korea and China are among the culprits.
South Korea and China, possible causes of the fall
The photo of that cryptocurrency market is all red. Bitcoin had a fateful month of almost continuous falls, and it seems that this fall has ended up infecting all the others. Even crypto currencies that seemed to be the rescue option for many investors (Ripple recently, IOTA somewhat earlier) are also losing value remarkably.
The reasons are found in the Southeast Asian markets. South Korea cut off the access that exchange markets for crypto currencies (exchanges) had to banks, and also vetoed access to foreign operators. That caused a significant rise in the values â€‹â€‹of the cryptocurrency in that country, which even caused CoinMarketCap to exclude them from their indices so that they would not destabilize values â€‹â€‹too much.
In addition, the Ministry of Justice of South Korea recently indicated that it intends to veto those exchanges, but the prime minister has indicated that this requires a vote in the National Assembly. This country is in contact with Japan (which has a positive attitude on cryptocurrency issues) and with China (which does not have one) to create a new regulatory framework.
This image has become traditional memes of the volatility of bitcoin in particular and the segment of cryptocurrency in general.
On top of that, China is also proposing new measures against these markets. One of the directors of a Chinese bank has indicated to the government that it prohibits the centralized exchange of virtual currencies and prohibits people and companies from offering services related to that activity.
China has already banned foreign exchange markets from operating locally, which already caused a drop in the value of bitcoin and other cryptocurrencies last year, but this new trend makes the difficulties in operating cryptocurrency in China even greater.
Whales and speculation
There are even more factors that affect this fall, such as the fact that Indonesia has also banned cryptocurrency transactions.
In Europe, France has also made moves to regulate cryptocurrency, something that seems to have also affected the valuation of various virtual currencies.
There are of course other theories centered on mere speculative interests: some futures products on bitcoin are about to expire and investors may now be betting on a lower price for BTC, but it may also be that the so-called “whales” of the market – entities and people with huge amounts of bitcoin – are “playing” with the system when trading with large quantities, something that ends up contaminating the entire ecosystem.
A cycle is repeated and that does not have to mean anything
Some see this fall as something that was expected sooner or later given the volatile nature of this type of market, but there is also room for those who believe that this is just a new cycle in the evolution of the price of bitcoin.
In fact in the image you can see how in the first quarter of 2015, 2016 and 2017 something similar happened and then bitcoin ended up recovering ground (and a lot).
There is not a certain pattern for those falls (each had different reasons), and what is important is that this “coincidence” does not prove anything: it may be that bitcoin (like the rest of cryptocurrency) keeps falling, or it may go back up. Anyone who says they know which the crypto market will go is either lying to you or is a fool.